ASB Partners Nuggets 12.20.24
This is a short weekly email that covers a few things I’ve found interesting during the week.
I’m playing in my first Pickleball tournament this Sunday to support a local charity…here’s my donation page if you are feeling generous
https://www.charidy.com/rcnPickleball/AdamBuckstein
Interesting Links/Reads
Many links are sourced from Marginal Revolution
What You Can Learn From Young Warren Buffett
The late Charlie Munger liked to say that to be a good investor, you have to fish where the fish are. To be a great investor, though, you have to fish where the fishing boats don’t even go.
‘The Nvidia Way’ Review: The Hard Work of Tech Mastery
As a business sage, Mr. Huang says that work is simply perseverance in the face of difficult odds and that character is the source of greatness. Asked how to be successful, he will respond: “I wish upon you ample doses of pain and suffering.”
Thomas Edison said that genius is 1% inspiration and 99% perspiration.
Louis Pasteur when he observed that “chance favors the prepared mind.”
Interest rates are not behaving themselves; they are not following the script laid out for them by Wall Street and the Federal Reserve. When the Fed started cutting its policy interest rate in mid-September, that was supposed to be the signal for bond prices to rise and for yields to fall. But the disobedient market has refused. Yields, after an initial decline, are pushing rather aggressively higher which I think is quite interesting.
That’s why I think 2025 might hold a bit of drama in the credit markets, perhaps a crisis of some kind where somebody can’t pay and that somebody knocks down a chain of other weak credits. And before you know it, the Fed has to intervene, cutting rates again.
To me, inflation resembles an underground coal fire. In places like West Virginia for example, these fires often smolder deep within active or abandoned coal mines, quietly spreading underground. Occasionally, telltale plumes of smoke seep from the ground, revealing their hidden presence. They can simmer for years, erupting sporadically and without warning. That’s what inflation resembles: The fire is not out, you can feel the heat on the soles of your shoes, you can see the smoke, and every once in a while, it flares. It flared in 2021, it flared in three waves in the 1970s, and possibly – everything’s a probability in our business – it’s going to come back again.
Inflation, according to economic analysis, is «always and everywhere» traceable to money supply, fiscal policy or public expectations. Yet, the lines of cause and effect are rarely so straight, but if there’s one sure, history-validated cause of inflation, it’s war. It’s the one activity, which – if carried on at scale – activates the money-printing presses, propels government spending and upends public expectations; all to the end of destroying life, property and, not infrequently, currencies. Today, there’s a real risk that one of the smoldering wars around the globe breaks out into something quite troubling, prompting the US to rapidly rearm on a large scale, and that would be a great inflationary impulse. Maybe the market is thinking about that.
However, America is the owner of the reserve currency franchise. It’s one of our proudest possessions, but it’s actually kind of a poisoned chalice: It empowered us to run up external debts, financing them with a currency only we can print, and benefiting from relentless demand for our securities. But these things don’t necessarily end during the lifetime of the people who identify the problem. Britain was the owner of the reserve currency privilege for many a decade, and the US has been the owner of this privilege for at least seventy years. So it doesn’t have to go away now, but I think it would ultimately be a good thing for the US if it did.
I believe, however, there is some element of the world getting tired of America’s value proposition. Namely, I’m referring to the bond value proposition. The world is not in any way tired of America’s equity value proposition. US stocks seem to be the only ones that matter these days.
I think of gold as the incorruptible legacy monetary asset and mining shares as a low-cost monetary derivative. There’s a company called Triple Flag Precious Metals. It’s a royalty trust that invests in mining companies in exchange for a claim on their revenues. That means, Triple Flag’s interests are tied to the top-line performance of these miners, without exposure to operating costs or operating margins. It’s an asymmetrical bet, because you have not so much exposure to the downside in proportion to your potential gains. It’s nicely structured as a speculation, the company is well managed, the management’s knowledge of the mining industry is demonstrated, and they own a lot of stock themselves.
With growth stocks like Nvidia dominating the stock market, value investors have faced a tough environment for years. How do you, as a member of the value tribe, cope with that?
We have been in a bad way for so long. It feels like we are a bunch of people looking into a restaurant window. Inside is a banquet going on, most delectable food and wines are being served and the value tribe is excluded, looking in from the outside, nosed pressed against the window.
But the cyclicality of ideas is as cyclical as the fluctuations in asset prices. That’s why I think a renaissance of value investing is inevitable, but I would appreciate it if the market gods would pick it up a little bit because none of us is getting any younger.
Podcast/Videos
The limited role of exercise in weight loss and its greater importance in improving health, body composition, and insulin sensitivity [19:45]
Peter’s take: “Overall, I don’t think exercise is a phenomenal strategy for weight loss.”
That’s not to say that exercise doesn’t play a role in maintaining a healthy weight (Peter thinks it does)
If you look at the experimental evidence (ie. calorie expenditure), exercise does not appear to be a very viable tool for fat loss
⇒ The majority of the work for fat loss really has to be done through caloric restriction
“If you just want to simplify and think of a machine with inputs and outputs, it’s really reduction of the inputs that seems to play the greater role in weight loss.”‒ Peter Attia
That said, we think that exercise is a very important part of health and that health is the single most important thing
Health is more important than weight loss per se
Furthermore, exercise does indeed make a difference for body composition, and body composition should probably be thought of as more important than weight per se
The “top five most important biomarkers” for assessing health [22:45]
#1 & 2 Peter wants to know apoB and Lp(a)
He doesn’t need to know anything else about your lipids
He doesn’t need to know your LDL cholesterol, HDL cholesterol, or even your triglycerides (unless you’re an edge case with triglycerides>600 mg/dL)
⇒ ApoB captures the full burden of your atherogenic particles
ApoB contains all the information of VLDL, ILDL and is more accurate than non-HDL cholesterol
He wants to know your Lp(a) because of the unique risk that carries
The good news is he only needs to know your Lp(a) 1 time and then we’re done with it
⇒ If either apoB or Lp(a) is elevated, we have work to do
#3 Peter likes to know the APOE genotype
It’s like the Lp(a), that’s a 1 and done test (you don’t need to know it over and over)
Peter explains, “I am firmly in the camp that this is actionable information. So I don’t think anybody including the most hardcore naysayers would argue that the information is important and it speaks heavily towards the risk of dementia and to a lesser extent cardiovascular disease.”
Explain another core framework that you talk about: the idea of “major in the major, minor in the minor”
There’s so much information coming at people and sometimes they can be a little bit paralyzed on what to do
Peter adds, “There is an epidemic of ‘majoring in the minor’ and ‘minoring in the major,’ and I don’t know who first said that.”
It’s not a mystery why this happens
It’s easier to think about NAD drips and saunas and cold plunges and red light therapy and green juices and this supplement and that supplement when all you have to do is basically buy them and they’re pleasant to engage in
Okay, saunas and cold plunge can be a little bit uncomfortable, but for the most part they’re pretty pleasant to engage in
It’s actually a pain in the butt to work out and be mindful of your nutrition
To minimize the amount of alcohol you eat
To put your stupid phone down and actually pay attention to the world
To go to bed on time and get up on time
Those things move the needle greatly, but they’re hard
We are all humans and we all tend to gravitate towards things that are easier
It’s easier to get a massage than to do a workout
I hope you enjoyed it.
Adam